Redfin (NASDAQ: RDFN) has been acquired by Rocket Companies (NYSE: RKT) in an all-stock transaction for $1.75 billion or $12.50 per Redfin share.
Shares of Redfin were trading considerably higher following the news as the markets ingested the acquisition.
As for Rocket, shares were slightly lower in an overall downmarket day.
Redfin is a real estate Fintech that claims the title of the number one brokerage in the US. It incorporates services like lending, insurance, and rentals. The company reported Q4 2024 revenue of $244.3 million, an increase of 12% compared to Q4 2023. Gross profit was $81.9 million, an increase of 12% year over year. The net loss for Q4 was $36.4 million, compared to a net loss of $22.9 million in the fourth quarter of 2023.
Rocket is best known for its online mortgage service but also provides overlapping services to Redfin. Since its inception, Rocket reports over $1.8 trillion in mortgage originations.
Varun Krishna, CEO of Rocket Companies, said the two companies combined will improve the experience of homebuyers by reducing cost, saving time via technology.
Glenn Kelman, CEO of Redfin, described said the two companies have been two halves of a similar vision.
“We want a customer to be able to check her phone to find out what she can afford, see which homes are just right for her, schedule a tour with a local, expert Redfin agent, and get pre-qualified for a loan, all in a matter of minutes. Varun and I see how much better real estate could be when AI guides customers not just through that first step in their search, but all the way home, through the sale, the loan and then a lifetime of accumulating equity and wealth.”
The combination is predicted to “achieve more than $200 million in run-rate synergies by 2027, including approximately $140 million in cost synergies from rationalization of duplicative operations and other costs.” Rocket also anticipates more than $60 million in revenue synergies from pairing the company’s financing clients with Redfin real estate agents.
Rocket shareholders will own approximately 95% of the combined company fully diluted, while Redfin shareholders will own approximately 5%.